UOB to acquire Citigroup’s consumer banking business in Malaysia, Indonesia, Thailand, Vietnam

A general view of the UOB headquarters in Kuala Lumpur September 5, 2019. — Reuters pic
A general view of the UOB headquarters in Kuala Lumpur September 5, 2019. — Reuters pic

KUALA LUMPUR, Jan 14 — United Overseas Bank Ltd (UOB)’s subsidiaries have signed agreements to acquire Citigroup’s consumer banking businesses, comprising its unsecured and secured lending portfolios, wealth management and retail deposit businesses in Indonesia, Malaysia, Thailand and Vietnam.

As part of the proposed acquisition, UOB intends to bring onboard the employees in the consumer business.

“The proposed acquisition would further strengthen and deepen UOB’s Asean franchise,” UOB deputy chairman and chief executive officer (CEO) Wee Ee Cheong said in a statement today.

He added that the exercise is expected to be completed between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process.

Completion of the acquisition in each country will be conditional on obtaining regulatory approvals relevant to each country.

Wee also said that UOB believes in South-east Asia’s long-term potential, and the group is looking forward to integrating Citigroup’s quality portfolio and welcoming its team, and creating value for an enlarged base of customers, employees and other stakeholders.

“The acquired business — together with UOB’s regional consumer franchise — will form a powerful combination that will scale up UOB Group’s business and advance our position as a leading regional bank,” he said.

Meanwhile, Peter Babej, Citi Asia Pacific CEO, said the bank is confident that UOB, with its strong culture and broad regional ambitions, would provide excellent opportunities and a long-term home for its consumer banking colleagues in Indonesia, Malaysia, Thailand and Vietnam.

“Focusing our business through these actions will facilitate additional investment in our strategic focus areas, including our institutional network across the Asia Pacific, driving optimal returns for Citi,” he said.

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Citigroup’s Consumer Business had an aggregate net asset value of approximately SG$4.0 billion (RM12.4 billion) and a customer base of about 2.4 million as of June 30, 2021, and generated an income of approximately SG$0.5 billion in the first half of 2021.

Excluding one-off transaction costs, the proposed acquisition is expected to be immediately accretive to UOB’s earnings per share and return on equity.

 The total cash consideration for the proposed acquisition will be calculated based on an aggregate premium equivalent to SG$915 million, plus the net asset value of the consumer business as at completion.

The proposed acquisition is expected to be financed through excess capital and estimated to reduce UOB’s common equity tier 1 (CET1) ratio by 70 basis points to 12.8 per cent, based on its capital position as at Sept 30, 2021.

However, the effect to CET1 ratio is not expected to be material and will be well within regulatory requirements. — Bernama


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